Fixation Of Minimum Wage Project


The Minimum Wages Act, 1948 is an Act of Parliament concerning Indian labour law that sets the minimum wages that must be paid to the skilled and unskilled labours. The Indian Constitution has defined a ‘living wage’ that is the level of income for a worker which will ensure a basic standards of living i.e. good health, dignity, education and provide for any contingency. However, to keep in mind an industry’s capacity to pay the constitution has defined a ‘fair wage’. Fair wage is level of wage that not just maintains a level of employment but seeks to increase it keeping in perspective the industry’s capacity to pay. To achieve this in the Central Advisory Council appointed a Tripartite Committee of Fair Wage. This committee came up with the concept of Minimum Wage. A minimum wage is such a wage that is not only preserves efficiency but also provides for education, medical requirements and some level of comfort. India introduced the Minimum Wages Act in 1948, giving both the Central government and State government jurisdiction of fixing wages. The act is not legally binding, but statutory. Payment of wages below the minimum wage rate amounts to forced labour. Wage Boards are set up to review the industry’s capacity to pay and fix minimum wages such that they at least cover a family of four member requirements of food, shelter, clothing, education, medical assistance, and entertainment. Under the law, wage rates in scheduled employments differ on basis of states, sectors, skills, regions and occupations owing to difference in costs of living, regional industries’ capacity to pay, consumption patterns, etc. Hence, there is no single uniform minimum wage rate across the country and the structure has become overly complex.

Fixing Of Minimum Rates Of Wages (Section 3)

According to Section 3 of the Act the appropriate Government may fix the minimum rates of wages payable to employees employed in an employment specified in Part – I or Part – II of the Schedule and in an employment subsequently added to the Schedule. The Government may review the minimum rates of wages and revise the minimum rates at intervals not exceeding five years.

Appropriate Government may fix separate minimum rates of wages for time rate and for piece rate. Different wage rates may be fixed for different scheduled employments, different classes of work in the same scheduled employment, for adults, adolescents, children and apprentices and for different localities and for any one or more of the wage periods, viz., by the hour or by the day or by the month or by such larger wage period as may be prescribed.

In Hassan Jan v State of Bihar, (1980) II LLJ 358 (Patna)the question for determination that in the absence of any rule under the Minimum Wages Act, 1948 then fixation of wage period of one year is valid or not.The court held that in scheduled employment it is not exceed more than one month and if it is then possible only by effect made and published in official gazette.

Constitutional validity of Section 3 was challenged in Bijoy Cotton Mills v. Stateof Ajmer, The Supreme Court has held that the restrictions imposed upon the freedom of contract by the fixation of minimum rate of wages, though they interfere to some extent with freedom of trade or business guaranteed under Article 19(1)(g) of the Constitution, are not unreasonable and being imposed and in the interest of general public and with a view to carrying out one of the Directive Principles of the State Policy enshrined in Article 43 of the Constitution of India, are protected by the terms of Clause (6) of Article 9.

In Chandra bhavan Boarding and Lodging, Bangalore v State of Mysore, (1970) II LLJ 403 SC the court held that Article 43 of the Constitution of India, 1950 mandates that the State should by suitable legislation or economic organization, secure the living wage to all workers whether agricultural, industrial. The fixation of wage under this Act is the first step more and more steps needed to implement this and it also improve the standard of living



  1. Employment in any woollen carpet making or shawl weaving establishment.
  2. Employment in any rice mill, flour mill or dal mill.
  3. Employment in any tobacco (including bidi making) manufactory.
  4. Employment in any plantation, that is to say, any estate which is maintained for the purpose of growing cinchona, rubber tea or coffee.
  5. Employment in any oil mill.
  6. Employment under any local authority.
  7. Employment on the construction or maintenance of roads or in building operations.)
  8. Employment in stone breaking or stone crushing.
  9. Employment in any lac manufactory.
  10. Employment in any mica works.
  11. Employment in public motor transport.
  12. Employment in tanneries and lether manufactory.


Employment in agriculture, that is to say, in any form of farming, including the cultivation and tillage of the soil, dairy farming, the production, cultivation, growing and harvesting of any agricultural or horticultural commodity, the raising of live-stock, bees or poultry, and any practice performed by a farmer on a farm as incidental to or in conjunction with farm operations (including Any forestry or timbering operation and the preparation for market and delivery to storage or to market or to carriage for the transportation to market of farm produce).

Minimum Rate Of Wages (Section 4)

SECTION 4 deals with the rates of wage fixed and revised by appropriate govt. in respect of scheduled employment consist of the

  1. Any minimum rate of wages fixed or revised may consist of a basic rate of wages and a special allowance ; or

2. A basic rate of wages with or without cost of living index and the cash value of concessions in respect of supplies of essential commodities at concessional rates; or all inclusive rate allowing for the basic rate, the cost of living allowance and the cash value of concessions, if any.

In MGB and AB Factories v State of Karnataka, (2003) III LLJ 861 (Kant.)The court observes the object of section 4 is that the minimum wage can be linked with the cost of living. Increase in cost of living is also affect the minimum wage and its payment on the part of the employer. In case the employer paid to the workmen higher wage from minimum as fixed by the govt. the he is not required to pay any dearness allowance.


There are four components of Minimum Rate of Wage

  • A basic rate
  • Cost of living allowance
  • Cash value of concession
  • A combination of all three components

In Hydro (Engineers) Pvt. Ltd. V The Workmen, AIR 1969 SC 182 the court held that minimum wage is independent from all perspectives such as profit/loss, industry big/small.

Procedure For Fixing And Revising Minimum Wages (Section 5)

In fixing minimum rates of wages in respect of any scheduled employment for the first time or in revising minimum rates of wages, the appropriate Government can follow either of the two methods-

  1. [Section 5(1)(a)] This method is known as the ‘Committee Method’.

The appropriate Government may appoint as many committees and sub-committees as it considers necessary to hold inquiries and advise it in respect of such fixation or revision as the case may be. After considering the advice of the committee or committees, the appropriate Govt. shall, by notification in the Official Gazette fix or revise the minimum rates of wages. The wage rates shall come into force from such date as may be specified in the notification. If no date is specified, wage rates shall come into force on the expiry of three months from the date of the issue of the notification.

In case of Edward Mills Co. v. State of Ajmer that Committee appointed under Section 5 is only an advisory body and that Government is not bound to accept its recommendations.

As regards composition of the Committee, Section 9 of the Minimum Wages Act lays down that it shall consist of persons to be nominated by the appropriate Government representing employers and employee in the scheduled employment, who shall be equal in number and independent persons not exceeding 1/3rd of its total number of members.

One of such independent persons shall be appointed as the Chairman of the Committee by the appropriate Government.

  1. [Section 5(1)(b)] The method is known as ‘Notification Method’.

When fixing minimum wages under Section 5(1) (b), the appropriate Government shall by notification, in the Official Gazette publish its proposals for the information of persons likely to be affected thereby and specify a date not less than 2 months from the date of notification, on which the proposals will be taken into consideration.

Representations received will be considered by the appropriate Government. It will also consult the Advisory Board constituted under Section 7 of the Act and thereafter fix or revise the minimum rate of wages by notification in the Official Gazette. The new wage rates shall come into force from such date as may be specified in the notification.

If no date is specified, the notification shall come into force on expiry of three months from the date of its issue. Minimum wage rates can be revised with retrospective effect. The appropriate Government is required to appoint an Advisory Board for advising it, generally in the matter of fixing and revising minimum rates of wages.

Central Government appoints a Central Advisory Board for the purpose of advising the Central and State Governments in the matters of the fixation and revision of minimum rates of wages as well as for coordinating the work of Advisory Boards.

Central Advisory Board consists of persons to be nominated by the Central Government representing employers and employees in the scheduled employments, in equal number and independent persons not exceeding 1/3rd of its total number of members. One of such independent persons is to be appointed the Chairman of the Board by the Central Govt.

In B. Y. Kshatriya v S A T B Kamgar Union, 1962 92) LLJ 736 (SC), the provisions of Section 5 challenged on the ground that it was ultra vires of the Constitution that an opportunity of hearing was not given to the employer before issuance of final order and the govt. could not fix higher rate of wage. But, the court rejected this contention and said that fixation of wage as per the advisory board and it cannot said that there is a violation of the any rule under this Act.


Fixation of minimum wages is an administrative act and the quantum fixed on the reasonable ground was not subject to judicial review, unless the fixation was ultra vires the provisions of Minimum Wage Act, 1948. The minimum wage must provide not merely for bare subsistence but for the preservation of workers efficiency also and so the capacity of the employer to pay such wage was treated irrelevant

This Minimum Wage Act is a beneficial piece of social legislation and in fixing wage under it, the focus on that workmen should receive the proper share of the national income.

written by :  Raj Kumar Verma
A student of university school of law and legal studies delhi, having a keen interest in labour laws. 

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